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Category: Articles

januaryAs published in The Self-Insurer,
January 2015

The National Association of Insurance Commissioners (NAIC) held its fall meeting in the Nation’s Capital in November. They have been working diligently for months on a proposal to update the 1996 Managed Care Plan Network Adequacy Act (Model Act). This task supposedly grew out of the concern of a growing trend of narrow networks, tiered networks and similar network designs. The Affordable Care Act (ACA) requires that health plans participating in the Health Insurance Marketplace provide enrollees access to a suffi cient number of in-network providers, including primary care and specialty physicians and access to necessary care needs to be available to all enrollees without unreasonable delay. The NAIC has since revealed their draft proposed changes to the Model Act and are accepting comments until January 12, 2015.

Most states have pretty broad standards requiring health plans in the insurance market to have a “robust” or “sufficient” network. In an attempt to help states set more standardized network adequacy, accessibility, transparency and quality standards, the NAIC has released their draft proposed changes titled “Health Benefit Plan Network Access and Adequacy Model Act” (Draft Model Act) and, once finalized, may be adopted by the States and may have far reaching implications for health plans and provider networks.

The Draft Model Act would apply to “health carriers” which is defined as follows:

“[A]n entity subject to the insurance laws and regulations of this state, or subject to the jurisdiction of the commissioner, that contracts or offers to contract, or enters into an agreement to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services, including a sickness and accident insurance company, a health maintenance organization, a nonprofit hospital and health service corporation, or any other entity providing a plan of health insurance, health benefits or health services.”

Single employer, self-funded group health plans governed by ERISA will not necessarily be directly impacted by this Draft Model Act. However, the networks they may be accessing may very well be. Insured plans, Multiple Employer Welfare Arrangements (MEWAs) and non-federal governmental plans will need to become familiar with the Draft Model Act and determine its applicability, particularly if it is likely to be adopted in their jurisdiction(s).

The Draft Model Act requires health carriers providing network plans to, inter alia:

  1. Maintain a network that is sufficient in numbers and types of providers to assure that all services to covered persons will be accessible without unreasonable delay; emergency services will be available 24 hours per day, 7 days per week; and “sufficiency” of the network shall be determined using reasonable criteria, including:
    • Provider-covered person ratios by specialty;
    • Primary care provider-covered person ratios;
    • Geographic accessibility;
    • Geographic population dispersion;
    • Waiting times for visits with providers;
    • Hours of operation;
    • New health care service delivery system options (i.e. telemedicine); and
    • Volume of technological and specialty services available for covered persons requiring technologically advanced or specialty care.
  2. Have a process to assure a covered person can obtain a covered benefit at an in-network level of benefits from a nonparticipating provider if:
    • A certain type of participating provider is not available; and
    • An insufficient number or type of participating provider is available to the covered person.
  3. Establish and maintain adequate arrangements to ensure reasonable access of participating providers to the business or personal residence of covered persons.
  4. Monitor, on an ongoing basis, the ability, clinical capacity, financial capability and legal authority of participating providers to furnish contracted covered benefits to covered persons.
  5. File an Access Plan with the State Insurance Commissioner.
  6. Establish a mechanism where the participating provider will be notified of the specific covered services, including limitations or conditions on services.
  7. Establish certain contract requirements with the participating provider including a hold harmless provision protecting covered persons, specific termination provisions, no balance billing and standards for tiering providers.
  8. Develop a written disclosure or notice to covered persons advising them (at time of pre-certification, if applicable) that services provided by a provider at an in-network hospital may not be treated as a participating provider.
  9. Post an online directory of all current providers for each network plan and update the directory at least monthly.

This, the Draft Model Act, on the heels of the October 10, 2014, Department of Labor (DOL) FAQ addressing factors the Departments will consider when evaluating whether a plan, that utilizes Reference Based Pricing or similar network design, is using a reasonable method to ensure that it provides adequate access to quality providers for purposes of complying and enforcing the requirements in PHS Act section 2707(b).

Although we are patiently awaiting additional guidance from the Departments on this particular issue, the factors that will be utilized in the interim include the following:

  1. Type of Service – Standards should be established to ensure that the network is designed to enable the plan to offer benefits from high-quality providers at reduced costs.
  2. Reasonable Access – Procedures should be established to ensure that an adequate number of providers accepting the reference prices are available to participants.
  3. Quality Standards – Procedures should be established to ensure that the providers meet reasonable quality standards.
  4. Exceptions Process – Develop an easily accessible exceptions process to address out-of network allowances.
  5. Disclosure – Automatically provide information regarding pricing structure, list of services to which the pricing structure applies and the exception process and further disclosure, upon request, a list of providers that will access the reference price; a list of providers that will accept a negotiated price above the reference price; and well as information on the process and underlying data used to ensure that adequacy and quality exist.

Carriers, PPOs, TPAs and group health plans need to determine the extent of the applicability of the Draft Model Act as well as the anticipated guidance by the DOL on Reference Based Pricing. Some entities are considering the following:

  1. Evaluating cost sharing levels for care that can only be obtained out-of-network to prevent unexpected and often prohibitively costly medical bills.
  2. Engaging the PPOs to determine applicability, network adequacy, quality measures and ability to comply.
  3. Evaluating Reference Based Pricing models that are currently in place.
  4. Engaging in a dialogue with Insurance Commissioners and regulators.

Regardless if your organization and/or your clients may be directly or indirectly impacted by one or both of the foregoing, I would strongly encourage engaging in a dialogue with all applicable entities and providing input to try and educate and offer clarity to avoid any unintended consequences that may result therefrom.

This article is intended for general informational purposes only. It is not intended as professional counsel and should not be used as such. This article is a high-level overview of regulations applicable to certain health plans. Please seek appropriate legal and/or professional counsel to obtain specific advice with respect to the subject matter contained herein.